May 14, 2009
By Brian M. Riedl
President Obama has proposed a historic expansion of spending,
taxes and debt. His budget would increase real spending from
$25,000 per household to $32,000 per household by 2019. It would
raise taxes by $1.4 trillion. And it would double the national debt
- a staggering $9.3 trillion in new borrowing.
A master communicator, the president employs clever rhetoric to
defend his tax-borrow-and-spend budget. Unfortunately, this
rhetoric fluctuates between misleading and false. Here are eight of
his bogus budget arguments:
Assertion No. 1: "I pledged to cut the deficit in half" by
Fact: The president doesn't mention that the deficit has
quadrupled this year. Merely cutting it in half from that bloated
level would still leave budget deficits twice as high as under
President Bush. This is like eating a 5,000 calorie meal, and then
pledging to halve your calories from that level.
Furthermore, three upcoming developments - the end of the
recession, troop pullout in Iraq, and phase-out of the supposedly
temporary "stimulus" spending - would, by themselves, cut the
budget deficit in half.
Despite Mr. Obama's talk of "inheriting" President Bush's $1.2
trillion deficit for 2009, then-Sen. Obama supported nearly all the
policies that created the deficit. That deficit estimate has surged
to $1.8 trillion since his inauguration. And when the recession
ends, Mr. Obama would still run $1 trillion deficits - compared
with President Bush's $162 billion deficit immediately before this
Assertion No. 2: "We have already identified $2 trillion in
savings over the next decade."
Fact: Savings relative to what? The president first creates a
fantasy baseline that assumes the Iraq surge continues forever
(which was never U.S. policy), and then "saves" $1.5 trillion
against that baseline by ending the surge as scheduled. It's like a
family "saving" $10,000 by first assuming an expensive vacation and
then not taking it.
Another $1 trillion in "savings" is actually tax increases.
Government savings used to mean spending cuts that save taxpayer
dollars. In the Obama White House, they mean tax increases that
feed the government.
Assertion No. 3: "If your family earns less than $250,000 a
year, you will not see your taxes increased a single dime."
Fact: This is patently false. The president has already signed
into law a 61-cent cigarette tax increase. His budget proposes a
$646 billion cap-and-trade tax that would be passed onto households
at an average cost of $600 to $2,000 annually.
Assertion No. 4: New spending is "temporary" to fight
Fact: Does anyone believe Mr. Obama, House Speaker Nancy Pelosi
and Senate Majority Leader Harry Reid will allow stimulus bill
expansions, including Pell Grants, food stamps and "make-work pay,"
to expire? The president's own budget already extends several
expensive stimulus provisions. Overall, his budget would create the
largest peacetime government in American history by 2019. There is
nothing temporary about it.
Assertion No. 5: Economic "day of reckoning" was caused by a
lack of liberal social policies.
Fact: Mr. Obama claims that the current economic day of
reckoning partially resulted from current health care, education
and energy policies, and that enacting his tax-and-spend reforms
are the solution. Nonsense. The recession was caused by a financial
crisis brought on by a housing bubble.
To argue that national health care, energy taxes and education
spending would have prevented this recession (they didn't save
Europe from the same financial calamities) or may prevent the next
is simply to use a financial crisis to shove an unrelated
big-government agenda down the throats of recession weary
Americans. Or, as White House Chief of Staff Rahm Emanuel
succinctly put it, "to never let a crisis go to waste."
Assertion No. 6: "A return to honest budgeting"
Fact: Mr. Obama deserves credit for reversing Mr. Bush's policy
of not budgeting for the Alternative Minimum Tax patch, the global
war on terrorism, and future unanticipated emergencies.
But the Obama budget has large gimmicks, too. In addition to the
$1.5 trillion Iraq "savings" trick described above, the president
ignores the economic consensus and assumes an economic boom will
begin next January. His budget assumes that he will allow most of
the "stimulus" spending to expire. The president also assumes that
- after a 7 percent increase next year - real discretionary
spending will be frozen for the following nine years. Finally, he
simply excludes the cost of his massive health plan from his budget
totals. These gimmicks lowball the 2019 budget deficit by more than
Assertion No. 7: A new direction from Mr. Bush's "deep fiscal
Fact: For all his criticisms of Mr. Bush's economic policies,
Mr. Obama is actually accelerating many of them. Mr. Bush engaged
in a massive spending spree, with large financial bailouts and big
deficits; Mr. Obama's budget proposes an even bigger spending
spree, more financial bailouts, and larger budget deficits. Mr.
Bush had the Medicare drug entitlement; Mr. Obama has a massive
health plan. Mr. Obama isn't rejecting Bushism, he's doubling down
Assertion No. 8: Agenda reflects "hard choices."
Fact: The president titled his budget "A New Era of
Responsibility." Yet promising voters huge new federal subsidies -
paid for by doubling the national debt - isn't exactly a profile in
courage. Instead, it is the most fiscally irresponsible budget in
American history. To propose dumping $74,000 per household of new
debt into the laps of our children and grandchildren is economic
Riedl is Grover M. Hermann Fellow in Federal Budgetary
Affairs in the Thomas A. Roe Institute for Economic Policy Studies
at The Heritage Foundation.
First Appeared in Washington Times
President Obama has proposed a historic expansion of spending, taxes and debt. His budget would increase real spending from $25,000 per household to $32,000 per household by 2019. It would raise taxes by $1.4 trillion. And it would double the national debt - a staggering $9.3 trillion in new borrowing.
Brian M. Riedl
Grover Hermann Fellow in Federal Budgetary Affairs
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